Trip.com’s international business continued to grow faster than domestic. The year-over-year revenue growth for hotels excluding Greater China destinations reached 51% in the fourth quarter of 2019 while international air ticketing volume delivered its 13th consecutive triple-digit growth in Q4 2019.

2.4. eDreams Odigeo

Includes 4 OTAs brands: eDreams, GoVoyages, Opodo, Travellink. And one metasearch: Liligo.com

In calendar year 2019 (which is different than eDreams’ fiscal year), eDreams Odigeo grew revenues by 8% and EBITDA by 17%, the highest rates since 2014. In the Q2-Q4 2019 period, however, EBITDA fell by 4% year on year. In this period, revenue grew by 3% in eDreams Odigeo’s 6 core markets and by 21% in other markets, which points to another year of market share loss in eDreams’ traditionally strongest markets (most likely mainly to airline competitors).

The company has stated that one of its key strategic goals for the last 5 years has been to diversify its revenues away from flights. In previous years, results have not shown much success on this front (see graph below), and the company did not include its flights vs non-flights revenue breakdown in its FY 2019, which might indicate that non-flight revenues have not made much progress. This might not be necessarily bad if it means that eDreams is focused on flight product innovation.

Fiscal Year ends March of the following year. Elaborated from data in eDreams Odigeo FY 2017 and FY 2018 annual reports

eDreams Odigeo provides another breakdown of revenues that shows an increase in “diversification revenues”, which includes flight ancillaries (reserved seats, additional check-in luggage…), flight insurance, as well as certain commissions, overcommissions and incentives directly received from airlines. As such, these “diversified revenues” continue to depend on the company’s ability to drive flight bookings. To understand whether eDreams Odigeo is indeed succeeding in its objective to expand its revenue beyond flight-dependent products, we would need to have a breakdown of its non-flight business (hotels, vacation packages). The only non-hotel business that eDreams gives details on is advertising and meta, whose share of overall revenues decreases year after year.

“Classic Supplier Revenue” represents GDS incentives for Bookings mediated by us through GDSs and incentives received from payment service providers. “Diversification Revenue”: revenue earned through vacation products (car rentals, hotels and Dynamic Packages), flight ancillaries (reserved seats, additional checkin luggage, travel insurance and additional service options), travel insurance, as well as certain commissions, over-commissions and incentives directly received from airlines. “Classic Customer Revenue” earned through flight service fees, cancellation and modification fees, tax refunds and mobile application revenue.

Marketing effectiveness ratio (marketing expenses / revenues) in calendar year 2019 was 63% (spends $63 in marketing to generate $100 in revenues), the highest among all OTAs in this analysis. It is also 4 percentage points worse than in 2013 but 2 percentage points better than in 2018. This high marketing expense ratio (compared to the industry) could be explained in large part by eDreams’ flight product specialization. At the same time, eDreams has also one of the highest EBITDA/Revenue ratios in the industry: 23%. The only other OTAs that have a better EBITDA margin than eDreams is Booking, at 39%.

eDreams mobile bookings reached 44% of total bookings in fiscal year ending march 2020, which compares favorably with Phocuswright’s estimated 31% mobile bookings for European online travel in 2019.

One very positive element in eDreams in the last couple of years is its Prime membership program, unique among all OTAs. In Q1 2020, it reached 556.000 subscribers, up from 165.000 a year before. This large base of subscribers should increase the rate of repeat purchases, lower marketing costs, and improve EBITDA as a result. I look forward to seeing this impact in the coming quarters and years.

2.5. Despegar

Despegar’s revenue grew by 1% in 2019, and by 19% in FX neural terms. Adjusted EBITDA was down 62% in 2019, while comparable Adjusted EBITDA declined 42%, reflecting challenging macro conditions in Argentina and to a lesser extent in Brazil, resulting in higher YoY price discounts in packages to drive growth, and lower fees from lodging and car rental transactions.

Despegar has successfully diversified its revenue mix beyond flights. Revenue from hotels and packages represented 50% of total revenues in 2016, 54% in 2017, 60% in 2018 and 62% in 2019.

Mobile transactions accounted 30% in 2017, 36% in 2018, and 41% in 2019.

At the beginning of 2020, Despegar announced its acquisition of Best Day, an OTA with a strong brand recognition in Mexico where it had an online channel and an asset light offline channel with approx. 200 Kiosks in Mexico. Best Day also competes online in Argentina, USA, Colombia, Brazil and Chile. Best Day also has white labels with major travel vendors and strategic partnerships with airlines, hotels, retail stores and banks. This B2B business generates 1/3 of Best Day revenues. In June 2020, Despegar announced changes in the acquisition terms. The $136 million original price was reduced to a base price of $57 million, and zero disbursement at closing instead of the 65% first payment originally negotiated.

2.6. Lastminute Group

Includes 6 OTAs: Lastminute.com, Bravofly, Volagratis, Rumbo, Crocierissime.it, Weg.de. And 2 metasearch: Jetcost and Hotelscan.

In 2019, Lastminute had another strong year, growing revenues by 20% and EBITDA by 62% while showing clear signs of succeeding in their declared goal In total of diversifying away from flights. In 2019, Lastminute’s Travel & Leisure revenues (Dynamic packages, Tour Operator packages, Hotels) were higher than flight revenues for the second year in a row. The Travel and Leisure share was 40.9% of core business revenues, slightly up from 2018 in % terms, but €23 million more in absolute terms. This increase was driven primarily by Lastminute’s dynamic package product, which constitutes 60% of travel and leisure revenues. Lastminute.com’s big success story over the past few years has been the dynamic package. Since 2014, this product has grown by over 14-fold in revenues.

Flight revenue share increased almost 5 percentage points to 39.6%, while metasearch revenue decreased by 5 percentage points, equivalent to a loss of €7 million from 2018 to 2019.

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